Comments on: What type of entity should I form? http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/ Venture capital, seed financings, convertible note bridge debt, M&A, option vesting and other matters explained for founders and entrepreneurs Sun, 11 Dec 2011 21:54:46 +0000 http://wordpress.org/?v=2.9 hourly 1 By: amitcv http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3384 amitcv Wed, 13 Jul 2011 22:02:38 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3384 Noopdaddy,<br>I'm assuming you got answers to your questions (or figured them out by now) - I have the same challenges - would love to get your perspective.<br>Thanks Noopdaddy,
I'm assuming you got answers to your questions (or figured them out by now) – I have the same challenges – would love to get your perspective.
Thanks

]]> By: Alexander Davie http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3382 Alexander Davie Wed, 06 Jul 2011 09:29:47 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3382 Why don't you form another LLC and have your main LLC be an owner in the new LLC along with your investors.  Essentially you'd be duplicating the limited partnership structure used by most investment funds. Why don't you form another LLC and have your main LLC be an owner in the new LLC along with your investors.  Essentially you'd be duplicating the limited partnership structure used by most investment funds.

]]> By: Hturko http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3291 Hturko Thu, 13 Jan 2011 06:31:22 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3291 Have you considered Wyoming? Have you considered Wyoming?

]]> By: Noopdaddy http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3207 Noopdaddy Sat, 24 Jul 2010 20:54:18 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3207 We are a group of three people (2 US permanent residents and one US citizen) who are about to launch a website, very similar to Craigslist. We do not need any money now from angels/VCs but if the site takes off we might in the future. Questions:<br>1. Should I go for LLC or S Corp or C corp. Minimizing the cost of incorporation is a big factor for us but I am willing to override if it will cause us exorbitant fees of conversions later.<br><br>2. If we go for LLC, should we go ahead and incorporate in Delware because that seems to be cheapest. I live in California. Will I still have to pay some taxes to CA since I live in California and hence doing business in California although I incorporate in delware? Also since its a nationwide listing website, I will be doing business pretty much anywhere in US!!<br>3. Whats the rugh order of magnitude difference in incorporation cost of LLC versus C corp versus S corp.<br>4. Whats the rough order of magnitude difference in minimm taxes for LLC versus C corp versus S crop, assuming that for the first year we will have almost zero revenue and some costs.<br>5. If I cannot get clear answers to these questions on this website for free, who can tell me a good laweyer in bay area who will give me clear answer without charging me a LOT.<br><br>I am sure a lot of technology start up have same questions when they start. I hope somebody is able to help me out here. We are a group of three people (2 US permanent residents and one US citizen) who are about to launch a website, very similar to Craigslist. We do not need any money now from angels/VCs but if the site takes off we might in the future. Questions:
1. Should I go for LLC or S Corp or C corp. Minimizing the cost of incorporation is a big factor for us but I am willing to override if it will cause us exorbitant fees of conversions later.

2. If we go for LLC, should we go ahead and incorporate in Delware because that seems to be cheapest. I live in California. Will I still have to pay some taxes to CA since I live in California and hence doing business in California although I incorporate in delware? Also since its a nationwide listing website, I will be doing business pretty much anywhere in US!!
3. Whats the rugh order of magnitude difference in incorporation cost of LLC versus C corp versus S corp.
4. Whats the rough order of magnitude difference in minimm taxes for LLC versus C corp versus S crop, assuming that for the first year we will have almost zero revenue and some costs.
5. If I cannot get clear answers to these questions on this website for free, who can tell me a good laweyer in bay area who will give me clear answer without charging me a LOT.

I am sure a lot of technology start up have same questions when they start. I hope somebody is able to help me out here.

]]> By: Noopdaddy http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3208 Noopdaddy Sat, 24 Jul 2010 20:46:08 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3208 Hi David : Did you get answer to your question? Hi David : Did you get answer to your question?

]]> By: Yokum http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3204 Yokum Fri, 23 Jul 2010 07:35:36 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3204 @Mich - You need to consult with an attorney who can confirm that the LLC conversion will be tax-free in the future based on your facts. Venture funds and silicon valley angels will not invest in an LLC. I never incorporate LLCs if the company needs outside financing or needs to grant options to employees. @Mich – You need to consult with an attorney who can confirm that the LLC conversion will be tax-free in the future based on your facts. Venture funds and silicon valley angels will not invest in an LLC. I never incorporate LLCs if the company needs outside financing or needs to grant options to employees.

]]> By: Mich http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3203 Mich Thu, 22 Jul 2010 20:45:00 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3203 Currently have LLC, one manager, all three investing in start-up no FFFs, percentages determined, OA in place and all in agreement. Works fine now. I am concerned LLC will pose a problem later (sooner than later) when AF or VC desires to invest. Should we become C-corp before valuation becomes higher. Gut feeling tells me LLC will eventually be a problem or rejected by outside investors...and I can not get a straight answer from qualified attorney. Simple solution now or difficult and distracting problem later.... Currently have LLC, one manager, all three investing in start-up no FFFs, percentages determined, OA in place and all in agreement. Works fine now. I am concerned LLC will pose a problem later (sooner than later) when AF or VC desires to invest. Should we become C-corp before valuation becomes higher. Gut feeling tells me LLC will eventually be a problem or rejected by outside investors…and I can not get a straight answer from qualified attorney. Simple solution now or difficult and distracting problem later….

]]> By: TallTex http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3144 TallTex Mon, 12 Apr 2010 09:57:46 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3144 I do not know how you can in a traditional LLC. However, if you are in one of the 8 States that have Series LLC then you may. Each series in a Series LLC may have different managers and members from other series in the LLC. For example you have the ABC, LLC, in my case a TX Series LLC, Series-A owns patents, trade secrets and other IP. Series-B owns most of the manufacturing equipment, Series-C owns the company's cash reserves and other "non-risky" assets, Series-D owns a seperate operating business with its own manager and memebers. The goal is for all risky assets to be owned within its own series and segregated away from each other and the company's safe assets. Even in a strong asset protecton state such as mine I would never advise a corporation to own significant assets or for any entity to "co-mingle" assets in the same pool. I do not know how you can in a traditional LLC. However, if you are in one of the 8 States that have Series LLC then you may. Each series in a Series LLC may have different managers and members from other series in the LLC. For example you have the ABC, LLC, in my case a TX Series LLC, Series-A owns patents, trade secrets and other IP. Series-B owns most of the manufacturing equipment, Series-C owns the company's cash reserves and other “non-risky” assets, Series-D owns a seperate operating business with its own manager and memebers. The goal is for all risky assets to be owned within its own series and segregated away from each other and the company's safe assets. Even in a strong asset protecton state such as mine I would never advise a corporation to own significant assets or for any entity to “co-mingle” assets in the same pool.

]]> By: Tammy http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3074 Tammy Fri, 19 Feb 2010 00:57:58 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3074 If an LLC wanted to form a subdivision for a specific project and have investors for the project alone, how would they go about doing that? If an LLC wanted to form a subdivision for a specific project and have investors for the project alone, how would they go about doing that?

]]> By: Yokum http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/comment-page-1/#comment-3049 Yokum Sun, 31 Jan 2010 03:29:22 +0000 http://www.startupcompanylawyer.com/?p=296#comment-3049 @cfoquest - A CA LLC can create multiple classes of ownership interests that mimic the rights of preferred stock. However, this is a custom document and require significant attorney time. In addition, holders of LLC membership interests subject to vesting in connection with services may file 83(b) elections. @cfoquest – A CA LLC can create multiple classes of ownership interests that mimic the rights of preferred stock. However, this is a custom document and require significant attorney time. In addition, holders of LLC membership interests subject to vesting in connection with services may file 83(b) elections.

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